Why gold has lost its luster

FORTUNE – For the 11th year in a row, gold prices have rallied, making this one of the longest winning streaks for the yellow metal. And for most of 2011, it seemed like nothing could stop prices from climbing — gold prices peaked in September at more than $1,900 an ounce.

But in recent months, many high-profile investors have sold their positions, suggesting that gold’s glory days could be coming to an end.

Billionaire investor George Soros, who called gold “the ultimate bubble,” cut his holdings in the SPDR Gold Trust GLD as early as May. Hedge fund manager and long-time gold bull John Paulson held tight for a few months, but eventually slashed his gold holdings by a third during the third quarter.

And last week, economist Dennis Gartman, who correctly predicted the slump in commodities in 2008, sold off the last of his bullion. He stresses that he isn’t bearish on gold, but thinks the precious metal isn’t exactly the safe haven that many investors have come to know it.

Admittedly, few are screaming bear in the gold market. But even the most bullish investors admit sentiments have changed in a noticeable way.

The last time gold went bust was in 1980, when prices dropped more than 60% in a single year. It wasn’t until 20 years later, in 2000, that investors saw positive returns. Is gold returning to a bear market?

Since its September peak, gold has since lost about 15% of its value. Technically, it takes a 20% decline for a bear market to transpire. It’s anyone’s guess where price may fall in the murky world of commodities investing, but the precious metal doesn’t have far to go before it formally enters bearish territory.

Here are four signs that suggest gold may be losing its glitter:

U.S. Treasuries get more love than gold

The world could nearly collapse, but the value of gold will remain. That popular notion has long fueled the rise of the yellow metal. Unlike other commodities, gold is known for its intrinsic value since there are few practical uses for it. And yet, it has been viewed as a safe haven from slumping stock markets and slow growth.

But at a time when European officials struggle with debt woes and slip closer to a recession, investors have actually been scurrying away from gold. Daily price swings have sent investors looking for an even safer bet, and they’ve found it in U.S. Treasuries. Ironically enough, this comes only four months after Standard & Poor’s stripped the U.S. of its stellar triple-A rating.

Bond yields, which move opposite of prices, have fallen to historic lows. Ten-year Treasuries have dropped to 1.87% — proving that investors’ appetite for such securities haven’t waned much, even as S&P warns that the U.S. is no longer the safest of borrowers.

Investors aren’t too worried about inflation

The flock to bonds also signals that investors aren’t very worried about inflation, says Cetin Ciner, finance professor at the University of North Carolina in Wilmington. This partly explains the fall in gold, which is often used as a hedge against steadily rising prices.

“It’s very hard to predict where prices could go, but ultimately the fundamentals are not there,” says Ciner, who has done extensive research on the gold market. “It’s not the safe investment that people thought it was. It has actually become very dangerous right now.”

Prices have fallen below gold’s 200-day moving average

When gold falls below the 200-day moving average, investors typically take notice. Last week, for the first time in two years, the precious metal fell below the average of $1,615 an ounce and is currently trading at $1,613 an ounce. Though this hasn’t led analysts to call a bear market, Boston University finance lecturer Mark Williams says investors should take the development as a “wake-up call.”

“The next resistance level is $1,500,” says Williams, a former trading floor executive. “If gold drops below this floor, it is further proof that the bubble, which peaked in September at more than $1,900, has begun to burst.”

Gold beats platinum

And then there’s platinum, a precious metal that also has industrial uses. Historically, platinum trades at a premium of $100 or more over gold. But that shifted in August when gold neared its most recent peak. Williams points out that this is another indicator that gold prices are inflated. At current platinum prices of $1,400 an ounce, gold could fall to $1,300 or lower, he says.